The latest data from ONS has shown retail sales volumes fell by 0.9% in September, following a rise of 0.4% in August. Furthermore, the GfK consumer confidence index dropped to a three-month low of -30 in October from September’s reading of -21.
“This sharp fall underlines that the cost-of-living crisis, and simply not having enough money to make-ends-meet, are still exerting acute pressure for many consumers,” explained Joe Staton, client strategy director at GfK.
While Grant Fitzner, ONS chief economist, cited cost-of-living pressures and unseasonal weather on the low retail sales, which were worse than expected – economists had forecast a 0.2% monthly fall.
“Retailers [are] telling us that cost of living pressures are influencing consumers, particularly for sales of non-essential goods,” he said.
“It was a poor month for clothing stores as the warm autumnal conditions reduced sales of colder weather gear. However, September’s unseasonable warmth did help drive up food sales a little, and fuel sales rebounded from last month’s fall.”
Looking at an annual comparison, sales volumes were 1% lower than a year ago. However, inflation meant that people actually spent 4.7% more, but got fewer items. Rising fuel costs are also likely to put a further strain on consumer spending.
“The start of October saw cooler weather bring to the fore concerns around higher energy bills and petrol. Surging mortgage and rental rates are now increasingly flowing onto household balance sheets and weighing sentiment down,” added Robyn Duffy, senior analyst for consumer markets at RSM UK.
Additionally, data from Shopify also highlighted that UK consumers have reduced their discretionary spending over the last couple of months. Its survey found 74% of UK have reined in their spending, with over half (53%) of UK shoppers putting aside money for Christmas shopping.
The report stressed the importance Black Friday and Cyber Monday (BFCM) events will be for retailers following these latest figures.
Gareth Newman, CEO and founder of Blakely, a UK founded clothing store, commented: “BFCM is a competitive time, and we find that a fast paced, reactive approach drives sales. Sometimes that means putting on the right sale at the right time, or using a sale to draw in people who haven’t shopped with us before but are sitting at the top of the conversion funnel and making sure we give them a reason to return.
“That’s one example of where linking up our in-store and online offer is really powerful: someone might wander into our store and buy in a sale, and if they opt in to hearing more from us we can create personalised rewards or an incentive to shop with us again.”
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